Fixed interest rates on home loans were little moved this past week, though a decline is likely ahead.
At 4.39 percent, 30-year fixed rates were 2 basis points lower in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday than they were seven days earlier.
But the 30 year is nowhere near as low as it was a 12 months earlier, when it averaged just 3.42 percent.
“Mortgage rates were flat to down a little this week amid reports that inflation remains subdued,” Freddie Mac Chief Economist Frank Nothaft explained in this week’s report. “The Consumer Price Index was up to 0.3 percent in December after being unchanged in November.”
Mortgage Daily’s analysis of Treasury market activity indicates that fixed rates could be around 6 BPS better in Freddie’s next survey as a result of weak economic data out of China.
The benchmark 10-year Treasury note yield averaged 2.85 percent during the period when Freddie surveyed mortgage lenders for this week’s report, based on data reported by the Department of the Treasury. The 10-year yield closed at 2.79 percent Thursday.
But all of the panelists surveyed by Bankrate.com for the week Jan. 23 to Jan. 29 disagreed with Mortgage Daily’s forecast, with 62 percent predicting no change during the next seven days and 38 percent expecting an increase of at least 3 BPS.
The latest forecast from the American Bankers Association has conventional mortgages averaging 4.61 percent in the first quarter, 4.77 percent in the following three-month period and 4.92 percent in the third quarter.
Jumbo rates were priced 13 BPS higher than on conforming loans in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Jan. 17. The jumbo-conforming spread slid from 22 BPS in the previous report.
A 1-basis-point decline from the week ended Jan. 16 left 15-year fixed rates averaging 3.44 percent. Fifteen-year mortgages lost some of their luster this week as the spread between short- and long-term mortgages narrowed to 95 BPS from 96 BPS in Freddie’s last report.
Freddie said that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.15 percent, 5 BPS worse than last week.
One-year Treasury-indexed ARMs averaged 2.54 percent in Freddie’s latest survey, 2 BPS lower than the prior report and 3 BPS better than in the week ended Jan. 24, 2013.
The one-year Treasury note yield closed today at 0.11 percent, the same as a week earlier, according to the Treasury Department data.
As is the case with the one-year Treasury yield, the six-month London Interbank Offered Rate is used to determine rate and payment adjustments on ARMs. LIBOR fell to 0.33 percent Wednesday from 0.34 percent one week prior.
ARM share in the most recent Mortgage Market Index report thinned to 11.8 percent from 12.8 percent one week earlier.